Are You Teaching Your Kids The Right Money Lessons?
May 28, 2019 (Investorideas.com Newswire) Ask any preschool student to create a budget for their allowance, and you are likely to get a shocked expression. And why should they know about money matters when all the efforts about financial literacy targets adults. Teaching kids the basic concepts of finance early should be done at home and in school as these are the main two places where young ones tend to spend most of their time. However, adults need to remember that financial literacy is more than just savings and investments. Everyone should know more about how to make smart money decisions.
When it comes to investing, loans, saving, and how to calculate interest, recent research shows that only one-third of the world’s population and 57% of adults in the US are financially literate. Another study shows that only 30% of American can answer simple financial questions about interest compounding, inflation, and risk diversification.
With such discoursing low scores, the importance of teaching financial matters to young kids cannot be emphasized enough. For students to understand financial literacy early in their lives, then the subject has to be taught both in school and at home. This means that adults who are less financially literate ought to read and gain more knowledge. Furthermore, education institutions which are well equipped with instructors who have specialized in finances will help transfer the knowledge to kids who do not get it at home. Here are more benefits of learning about finance early on.
- Make it a habit
Just like other habits such as eating healthy, exercising and maintain personal hygiene which you start learning about them early on, consequences of financial decisions is a good habit that one can also learn. This does not imply that kindergarten kids should begin learning how to balance a checkbook using a spreadsheet. Instead, kids can start with basic concepts such as the value of money and price comparison. Instances such as those where a kid wants a video game, the latest gadget or toy can be a learning lesson as you can ask them to save their allowances and buy what they want.
- Learn from experts
Another way in which students can learn more about stock, forex trading, and essential financial lessons is through an expert. Professional essay writers or online tutors who are experts in economics can be a great source of information. The papers they provide can act as a reading material which will help expand your knowledge of basic financial concepts from budgeting, stock analysis, mutual funds to economic forecast. For fast access to information, the number one place to go is online. You can also get tutorials that will provide an in-depth look at a wide variety of financial information. Be careful with the resources you get online, as some can be misleading. Instead, always get your information from credible sources, especially those who are experts in that industry.
- Know the power of compound interest
Compound interest is one of the most important lessons that a kid will have to know. The power of compound interest teaches kids about long term saving and how money can grow. You can explain the concept of saving money and gaining interest to children who are ten years and above. For example, you can tell your kids how much interest they are likely to gain when they save their money for a specific period. Creating an image where kids will see that their money will increase considerably is likely to motivate them to embrace compound interest.
- Use practical lessons
Most young kids have not grasped the idea of saving money because they want to buy things there and then. However, you can also use a practical lesson where you allow your child to save money for an expensive gadget, outfit, or toy. Also, when going shopping, you can test whether or not they have understood the financial lesson by asking questions. You can also give your kid some money and ask them to choose what to buy. Including your kids in financial decisions is one of the best ways to offer practical lessons about money.
The sooner parents and teachers can use every day teachable money moments, the better they can help set the tone for later on. Besides, regardless of whether your kid is in preschool or high school, several money lessons are age appropriate. You can start by teaching your young ones the financial basics and later move on to more complex concepts. Either way, when you start teaching your child financial education at a young age, it will set them up for a successful financial stable life both outside the home and school.
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